How many CPAs and audits are really out there?
So has anyone counted the CPAs?
Searching to find the exact number of CPAs in the USA is a daunting task. Information can be cited from many different sources. The Bureau of Labor and Statistics stated in 2012 there were 1,275,400 accounting jobs in the USA. The BLS was projecting a 13% growth rate each year. This equates to 1,840,268 accounting jobs in 2015.
Finding the number of certified public accountants is where it gets tricky because the number of CPAs has not been growing like the rest of the accounting industry. Membership to the AICPA is a good indicator though and it states there are around 400,000 members for 2015. Since AICPA membership is not mandatory, this only gives us a ballpark number.
We also have to consider most CPAs work "in industry". Which means they work as employees in roles such as controllers, CFOs or bookkeepers. Roughly about 20% of CPAs work in public accounting. The AICPA states there are about 46,000 CPA firms in the US (http://www.aicpa.org/CAREER/CAREERPATHS/PUBLICACCOUNTING/Pages/default.aspx). So if we assume half provides tax services and the other half provides auditing services, that leaves us with approximately 23,000 CPA firms and 40,000 Auditors.
So now that we have a very vague idea of how many auditors there are in the USA how many organizations need financial audits? First a financial audit is traditionally driven by a requirement or compliance with a governing body or organization. Financial audits come in many different shapes and sizes due to the nature of the business being audited, business location, organization of financial records (or lack thereof), and team dynamics - internal company team and external auditing team. So let's look at some organizations who routinely need a financial audit.
Organizations Needing a Financial Audit (US only):
1. Local Governments - 89,004 (2012)
2. Employee Benefit Plans - 85,799 plans with over 100 participants (2012)
- According to US Dept of Labor - Federal law requires employee benefit plans with 100 or more participants to have an audit as part of their obligation to file an annual return/report (Form 5500 series)
- National Center of Employee Ownership 2012 there were 6908 ESOPs in US with over 100 participants - https://www.nceo.org/articles/statistical-profile-employee-ownership
3. NonProfit Organizations - 600,000
- Audit required for nonprofits that expend $750k or more in federal funds annually
- 27 states require audit or review of charitable nonprofits
- According to the National Center for Charitable Statistics (NCCS), more than 1.5 million nonprofit organizations are registered in the U.S
4. Hud Audits - 786,019 (2014)
- Submissions are due from all projects with HUD-insured or HUD-held mortgages, or direct HUD loans or capital grants. Submissions are also due from owners of non-insured projects if there is a contractual requirement to submit financial statements
- Quarterly Hud activity reports http://portal.hud.gov/hudportal/HUDrc=/program_offices/housing/rmra/oe/rpts/rtc/fhartcqtrly
5. Home Owner Associations
- Many HOAs require annual audits
- 300,000 HOAs in US according to HOA USA http://www.hoa-usa.com/about.aspx
6. Publicly Traded Companies
- The SEC requires all public companies have an annual financial audit
- The big 4 CPA firms control 98% of auditing services for all publicly traded companies
7. Private Companies
- Private or small companies can need a financial audit for many reasons: during a loan application, acquisition, expansion, etc.
8. Other industries that need or require a financial audit
- Construction, Crowdfunding Campaigns that raise over certain amount, Banks, Healthcare, Dealerships, Restaurants, Religious Organizations
Because of the labor intensity of performing a financial audit, time to conduct the audit and insurance and other costs to the CPA, most CPAs specialize in a particular industry or two when offering auditing services. So how do you find a CPA that not only conducts financial audits but has experience in your industry?
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